Here’s a question: What do New Zealand and Finland have in common? Both have a similar population. They are similar in size. Both have a single large city which accounts for a big chunk of the population – Helsinki is similar in size to Auckland with something over 1 million population. And neither Finland nor New Zealand is blessed with significant mineral riches. So what?
Well, I just read a document by Dr Shaun Hendy – deputy director of the MacDiarmid Institute for Advanced Materials and Nanotechnology. Dr Hendy must have had some time on his hands, as he has researched the last 30 years of OECD filed patents. He found that New Zealanders are filing new inventions at about a quarter of the OECD average rate. Meanwhile, our Finnish cousins are filing patents at the rate of 10 times the OECD average!
I might be being a bit simplistic with Dr Hendy’s statistics here, but according to my maths that makes the Finns around 40 times (!) more prolific at filing new inventions that the Kiwis!
How can this be?
I thought we were a hotbed of inventiveness … courtesy of our fabled Kiwi ingenuity and the number eight fencing wire “can do” mentality inherited from our pioneering forefathers.
I don’t know what the answer is, but here are some guesses:
According to Dr Hendy, Finland pours huge resources into growing its number of engineering PhDs. New Zealand on the other hand appears to prefer training arts graduates, accountants and social workers.
New Zealand recently joined the ranks of other OECD countries with its 15 per cent tax credit for research and development – only to scrap it on vague grounds after just 12 months in effect.
The New Zealand Government spends 0.5% of this country’s GDP on research and development. Finland spends 3% of its GDP.
Could there be a cultural difference, where the Finns seriously value entrepreneurial success – and kiwis prefer as a country to see sporting achievements honoured?
So what can we do?
I have plenty of thoughts – mostly around New Zealand as a nation encouraging and nurturing entrepreneurial behaviour. This can be achieved incrementally by investing much more in business incubators and clusters such as the ICEHOUSE, by fully funding business planning competitions such as Spark at every university, by encouraging technical education in New Zealand from a young age – and by bestowing a little of the profile and kudos onto entrepreneurs which we kiwis reserve for sporting success.
The tax system could be harnessed by encouraging investment in productive or entrepreneurial enterprise rather than encouraging en masse negatively geared investment in residential real estate. We could pick winning industries where New Zealand actually stands a chance of being competitive on the world stage – and then actively identify and nurture the entrepreneurial stars as they emerge in those industries.
The political will to take all the actions at once above seems unlikely, but surely some extra effort in this direction must be a priority for New Zealand?
Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.
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